RISE summarizes recent regulatory-related headlines and reports.
Bipartisan lawmakers urge CMS to work with Congress over MA overpayments
A group of bipartisan senators called on Centers for Medicare & Medicaid Services (CMS) Administrator Mehmet Oz, M.D., to work with Congress to address the persistent issue of overpayments in Medicare Advantage.
In a letter to Dr. Oz, Senators Jeff Merkley ( D-Ore.), Bill Cassidy, M.D., (R-La),Tina Smith (D- Minn.), and Roger Marshall (R-Kan.), wrote about their concerns with upcoding, a practice that occurs when health insurance companies submit unsupported diagnosis codes to a patient’s medical record to make them appear sicker and receive high payments, even if the patients don’t receive treatment for those conditions.
According to the Medicare Payment Advisory Commission (MedPAC), in 2025, CMS was projected to overpay Medicare Advantage by $40 billion or 10 percent due to ‘upcoding,’ overstating the health differences between Medicare Advantage and fee-for-service enrollees.
The lawmakers said they are pleased that CMS has proposed a provision in the No Unreasonable Payments, Coding, or Diagnoses for the Elderly (No UPCODE) Act to exclude diagnoses from unlinked chart review records from risk score calculations in the 2027 Medicare Advantage (and Part D Advance Notice. “While we hope to see this finalized, we believe the evidence requires Congress to pass the No UPCODE Act to truly address the persistent issue of risk score gaming and to curb abuses in coding intensity,” they wrote.
Congress, they said, needs to do more to address upcoding, such as directing the Department of Health and Human Services (HHS) to exclude diagnoses collected from health risk assessments and all chart reviews. It also should direct HHS to modify the risk adjustment methodology to incorporate two years of diagnostic data rather than one year of data, to capture conditions that are not consistently reported year-to-year, such as underreported chronic conditions.
They also believe Congress should direct HHS to adjust payments based on the true coding pattern differences between Medicare Advantage and fee-for-service Medicare. MedPAC’s preliminary 2026 assessments finds that, net of the statutory minimum coding adjustment, higher Medicare Advantage coding intensity will increase payments to plans by 4 percent in 2026, suggesting that a higher coding pattern adjustment is needed to achieve actuarial equivalency.
OIG audit: Priority Health received $4.4M in overpayments for high-risk diagnosis codes
Meanwhile, a new Office of Inspector General (OIG) audit found that Priority Health, a Medicare Advantage organization based in Michigan, received at least $4.4 million in net overpayments from Medicare for payment years 2018 and 2019.
The audit is part of a series of inspections in which OIG reviews high-risk diagnosis codes that Medicare Advantage organizations submit to the CMS as part of its risk adjustment program. Auditors focused on high-risk diagnosis codes for acute stroke, acute myocardial infarction, embolism, lung cancer, breast cancer, colon cancer, prostate cancer, ovarian cancer, sepsis, and pressure ulcer. They identified 2,515 unique enrollee-years but limited the review to portions of payments made in 2018 and 2019 that were associated with the high-risk diagnosis codes and audited a stratified random sample of 300 enrollee-years.
Auditors found that medical records for 252 of the 300 sampled enrollee years did not support the submitted diagnosis codes and resulted in $828,010 in net overpayments. Based on those sample results, OIG estimates that Priority Health received $4.4 million in net overpayments for 2018 and 2019.
OIG recommends that the money be refunded to the federal government and that Priority Health look for similar instances of noncompliance that occurred after the audit period and refund any overpayments. In addition, it called on the organization to review its compliance program and make necessary improvements for diagnosis that are at high-risk for being miscoded. Priority Health has disagreed with some of the findings and all of OIG’s recommendations.
EFF sues CMS over Medicare’s AI prior authorization pilot program
The Electronic Frontier Foundation (EFF) has filed a Freedom of Information Act (FOIA) lawsuit against CMS seeking records about its new pilot program that will use artificial intelligence to evaluate requests for Medicare care.
The Wasteful and Inappropriate Service Reduction (WISeR) Model for Original Medicare launched January 1 in six states to test AI can speed up the prior authorization process for services considered vulnerable to fraud, waste, and abuse.
EFF, a nonprofit organization that aims to ensure that technology supports civil liberties in the digital world, is concerned that CMS has provided little information about how WISeR will use AI algorithms, including what training data they rely on. It also is unclear whether the model has any safeguards against systemic flaws such as algorithmic bias, privacy violations, and wrongful denials of care.
"Tasking an algorithm with making determinations about treatment can create unwarranted—and even discriminatory—delays or denials of necessary medical care," said Kit Walsh, EFF’s director of AI and access-to-knowledge legal projects, in an announcement. "Given these serious risks, the public requires transparency that it hasn't gotten. We're suing to get badly needed answers about how Medicare's AI experiment works."
Earlier this year, EFF submitted a FOIA request to CMS asking for records related to WISeR. Among other records, the request sought agreements with software vendors participating in WISeR; records related to any tests for accuracy, bias, or hallucinations in vendors' technology; and records related to any audits, monitoring, or evaluation of WISeR and participating vendors. To date, CMS has not provided any of these records to EFF. The lawsuit asks for their immediate processing and release.
"The public has a right to know more about the algorithms driving decisions around their health care," said Tori Noble, staff attorney at EFF, in the announcement. "Without greater transparency, patients, providers, and policymakers will continue to be left in the dark.”
DOJ: Telemedicine company owner pleads guilty to $46M Medicare fraud
The owner of a Florida telemedicine company last week pleaded guilty to organizing and leading a $46.2 million Medicare fraud conspiracy that spanned more than six years.
Christopher Harwood, 43, admitted in court that he owned and operated TelevisitMD and targeted Medicare patients through aggressive telemarketing campaigns, inducing them to accept orthotic braces and genetic tests that they did not need. Harwood paid doctors to approve orders for these braces and genetic tests. These doctors did not follow Medicare’s rules for telemedicine visits, did not have real medical relationships with the Medicare patients, and often signed orders for orthotic braces and genetic tests without any meaningful interaction with the Medicare patients. Harwood then sold the signed doctors’ orders to durable medical equipment (DME) supply companies, laboratories, and marketers who were part of the scheme, according to the Department of Justice.
The DOJ said Harwood also owned and operated many DME supply companies based in Florida that he used to bill Medicare millions of dollars for orthotic braces that Medicare patients did not want or need. In total, he submitted at least $46.2 million in false and fraudulent claims to Medicare. CMS paid $17.9 million based on these claims, and Harwood personally received more than $10.4 million from the fraud scheme.
Harwood pleaded guilty to conspiracy to commit health care fraud and wire fraud and agreed to pay $17.9 million in restitution. He faces a maximum sentence of 20 years in prison.
Texas man sentenced to prison for $61M telemarketing Medicare fraud scheme
The DOJ also announced that the owner and operator of seven durable medical equipment supply companies based in Florida, Texas, and Maryland, was sentenced to more than 12 years in prison and two years of supervised release for organizing and leading a $61.5 million health care fraud and wire fraud conspiracy,
According to the DOJ, thousands of Medicare beneficiaries were victims of his deceptive telemarketing and were sent thousands of orthotic braces, foot baths, and genetic tests they did not need.
Robert “Bobby” Leon Smith III, 50, of Archer City, Texas, owned a marketing company based in Texas to conduct telemarketing campaigns and worked with an office call center in the Philippines to peddle the medically unnecessary equipment, according to evidence and documents presented during the trial.
Smith obtained doctors’ orders for these products by paying kickbacks and bribes to illegitimate telemedicine companies. He then sold these doctors’ orders to other medical suppliers that he knew used them to submit false and fraudulent claims to Medicare.
After four days of a jury trial, Smith pleaded guilty in March 2025 to one count of conspiracy to commit health care fraud and wire fraud and one count of health care fraud. Smith later escaped and failed to appear for sentencing. He remained at large for over a month before he was caught by the U.S. Marshals Service. During his sentencing, Smith was sentenced to 12.5 years in prison, ordered to pay $30 million in restitution and forfeit $9 million and real estate located in Texas.
CMS announces new IRE contract award and transition
In a March 31 memo to Medicare Advantage organizations, Jennifer Smith, acting director, Medicare Enrollment and Appeals Group, said that CMS has awarded the Part C Independent Review Entity (IRE) contract to C2C Innovative Solutions. Beginning May 1, the company will be responsible for conducting appeals of adverse reconsiderations issued by Part C plans, as well as reviews of plan dismissals of appellant reconsideration requests.
Meanwhile, the current Part C IRE, Maximus, will continue to process appeal requests received on or before April 30. As a result, there will be a short period of time when both Maximus and C2C will be issuing decisions. For more information, click here.